Group: Duke doesn't need rate increase for coal ash cleanup
Posted June 10, 2014
Raleigh, N.C. — A group that conducts research on financial and economic issues related to energy and the environment said Tuesday that Duke Energy has enough money to clean up its coal ash ponds across North Carolina and doesn't need to seek a rate increase to pay for it.
Duke has said it would pick up the cost of cleaning up a coal ash spill that fouled about 70 miles of the Dan River with toxic sludge four months ago, but if the Charlotte-based utility is required to clean up the ash at 32 other storage ponds statewide, company officials said they plan to pass as much of the cost as possible to consumers through higher electric rates.
State lawmakers are working on legislation that would set a timetable for Duke to clean up its ash ponds. Depending on the final requirements, Duke officials have said a cleanup could cost anywhere from $2 billion to $10 billion.
The nonprofit Institute for Energy Economics and Financial Analysis said Duke and its subsidiaries could easily use a combination of operating revenue, increased borrowing, insurance, lower dividends, the sale of non-core assets and adjustments to its capital spending program to finance cleaning up its ash ponds.
“North Carolina residents and Duke Energy are partners,” Tom Sanzillo, the group's director of finance and a former deputy comptroller for New York state, said in a statement. “That means mutual responsibility and mutual commitments. For Duke to seek a rate increase to pay for the coal ash cleanup amounts to a breakdown of its responsibilities and is both one-sided and short-sighted.”
Duke spokesman Jeff Brooks said the analysis "greatly oversimplifies" the requirements and complexities of operating a regulated utility, ignores the company’s legal responsibility to maintain a highly reliable electric system and "fails to accurately consider the negative, long-term financial implications on electric customers of its proposed recommendations."